The AUD/USD pair had a pretty strong showing during the day on Wednesday, as we cleared the 0.88 level. This area has been resistive recently, but the market has gone back and forth in this area enough to perhaps take some of the psychological strength out of it. Regardless, the market has struggled towards the top of the range for the session, leading me to believe that the sellers are still very much in this market.
Looking at the top of the daily range, you can see that the 0.89 level is part of what offered so much resistance, and we did selloff somewhat hard towards the end of the day. With that, I believe that this market will start selling off, possibly based upon short-term trading. Regardless, I believe that waiting for a resistant candle above here is probably and even safer trade, as the noise that we saw in this market back in December should continue to work against the value of the Australian dollar.
Gold markets aren’t necessarily helping.
The gold markets aren’t necessarily giving the boost to the Australian dollar that they typically do when going higher, as it has been grinding higher, not necessarily taking off. Because of this, it appears that the correlation has broken down a little bit, and this continues to be something involving the Australian dollar more than anything else.
The Federal Reserve continues to be in the limelight as well, as the possibility of tapering off of quantitative easing will massively influence what happens with the US dollar. When you marry two currencies that are on opposite ends of the spectrum like we have here, you could have potentially strong moves. A move that gets below the recent lows sends this market down to the 0.85 level. Down there, we would more than likely see some type of bounce based upon the large round number, as it certainly will bring a lot of attention. The area is important on the longer-term charts, so quite frankly I think it might be a nice potential buying opportunity for the short-term.
